Krispy Kreme

2941 Words Dec 22nd, 2015 12 Pages
Krispy Kreme Strategic Analysis:
Introduction
In 2003 Krispy Kreme was named by Fortune Magazine as “America’s Hottest Brand” and in 2004 they reported net income of $50 million. However over-expansion, an expensive store network, revelations of falsified financial reports and changing trends in diet have meant that Krispy Kreme revenues have declined by 50% between 2005 and 2010
The strategic problem considered is to analyse Krispy Kreme’s current operations and suggest recommendations for how this may be tailored for the UK market for long-term profitability given cultural and retail differences.
Current strategy
Krispy Kreme operates 582 stores (including franchised) in 18 countries worldwide. Stores range from 4,000 to 8,000
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Krispy Kreme train their staff who usually have little experience or education; consequently, they pay employees minimum wage or similar and are therefore affected by minimum wage increases. Other political factors are government actions to reduce obesity; however it is very unlikely that government will legislate against high fat and unhealthy foods
Economic
The continued economic downturn has meant tightened consumer spending, as Krispy Kreme is a non-essential food item this may pressure sales. Inflation is above the Bank of England target and there is upward pressure on long-term interest rates as shown by the UK treasury yield curve. An increase in interest rates will increase the cost of capital and mean more expensive borrowing at a time that they could need to expand to compete with rivals.
Social
UK consumers are becoming more aware about the ingredients in food, e.g. boycotting trans-fats, battery farmed poultry and mass farmed tuna. In 2008 this motivated

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